Armenia Pays Off Russian Gas Debt, Secures Fuel For Metsamor

After months of intense negotiation Armenia has paid off all its debts for past supplies of Russian natural gas and has reached agreement with Moscow on further deliveries of fuel for the nuclear power station in Metsamor, Energy Minister Karen Galustian announced Thursday. He said Russia’s Gazprom monopoly has written off the remaining debt of $8.3 million, in a swap deal with the Armenian government.

Gazprom obtained a 55 percent controlling stake in Armenia’s entire gas infrastructure in 1997 and was to make its financial contribution to the newly formed Armrosgazprom venture in the form of gas supplies. As of last month, it still had to deliver $9 million worth of vital fuel to Armenia free of charge.

Galustian told reporters that the two sides have now agreed to clear all mutual liabilities under the so-called “zero option.”

The deal reduces Armenia’s overall debt to Russia to approximately $88 million. Last month the Armenian government diverted $20 million in privatization proceeds to the urgent partial repayment of the debt, which stood at $116 million earlier this year.

Over the past year Gazprom and its US-registered ITERA subsidiary have repeatedly cut the flow of gas through a pipeline passing via Georgia, demanding that Yerevan pay the gas debt. Galustian has paid several emergency visits to Moscow to negotiate with senior Russian energy officials in recent months.

He said on Thursday that another “important” agreement reached with Russia paves the way for imports of fresh nuclear fuel for the Metsamor plant, which is due to be stopped for regular maintenance and refueling within the next ten days.

The government needs to raise $13.8 million to purchase a new batch of Russian fuel. Its hopes for obtaining another Russian loan were dashed recently when Moscow demanded that Yerevan first repay around $17 million in outstanding debts for previous fuel supplies.

According to Galustian, the Russian ministry of atomic energy has agreed to provide the fuel after an “advance payment” of $4 million from the Armenian side. The remainder will be paid in the next three months, Galustian said. Earlier this month, the government instructed the Metsamor management to borrow the required sum from foreign commercial banks, offering its financial guarantees.

Asked about the fate of the $17 million Metsamor debt, Galustian said: “It has been agreed that we will start repaying it from next October or November and complete the process in June or July 2002.”

The minister also pledged to pay all back wages of the Metsamor personnel by the end of August. Some 160 employees of the nuclear plant, who haven't been paid in five months, warned last week that the authorities will face “unpredictable consequences” if they don’t clear the wage arrears within the next two weeks. In a letter to President Robert Kocharian and Prime Minister Andranik Markarian, they said their growing frustration puts Metsamor’s safety in jeopardy.